What is a constructive fraudulent transfer?

A constructive fraudulent transfer is a type of transaction where a debtor attempts to hide their assets from creditors in order to avoid paying their debts. This type of transaction usually involves transferring assets to a family member or friend, or to a company where they have a significant ownership stake. In New York, a debtor’s obligations to their creditors are imposed by law and any attempt to avoid those obligations constitutes a fraudulent transfer. Under New York law, a constructive fraudulent transfer is typically found when a debtor transfers their assets for unreasonably low amounts, or for amounts much lower than fair market value. A transfer is also typically deemed fraudulent if the debtor’s assets are transferred to a family member or friend, or to a company where the debtor has a significant ownership stake. Constructive fraudulent transfers are not limited to financial assets, they can also include tangible assets and real estate. In such cases, the creditor can go to court to recover the value of the asset from the other party. Constructive fraudulent transfers are serious offenses and can result in severe civil and criminal penalties. Therefore, debtors should take time to understand New York’s creditors’ rights law in order to avoid engaging in such transactions. Consulting a lawyer can be a good way to ensure all transactions are done in compliance with the law.

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What is a constructive fraudulent transfer?

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